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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: NateC who wrote (10196)4/1/1999 4:42:00 PM
From: Jeff Meek  Read Replies (2) of 14162
 
Regarding actions and motivations of the MM's: There is a former MM named Michael DePinto who posts often in the thread "Options for Newbies"
www3.techstocks.com
If you have specific questions, he has been more than happy to share his opinions and experience. The thread is well worth taking the time to read. There are alot of "newbie" questions, but there are also some real gems.

The following 2 answers are my best recollection of Mr. DePinto's response to these issues.

Option limit orders: The MM is legally obligated to sell up to 10 contracts when an order comes in AT THE ASK. That is his job afterall, to make the market. If an order comes in below the ask, then the person who placed that order is now the one setting the market. The MM can then do what he pleases.

Different option exchanges: There is no central authority for the exchanges, so where your order gets sent can have an impact on the fill you receive. Whether or not you can specify an exchange is up to your broker. Also, brokers sometimes have their own MM for a particular option on a particular exchange. So they will ALWAYS send your order to that exchange, to give themselves the business.

-Jeff
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